Calls for winding down the rate regulator—Tariff Authority for Major Ports, or TAMP—for 11 of the 12 ports owned by the Indian government have always come from port investors affected by rate cuts.
The investors have argued that India’s ability to attract private funds into its state-run ports would depend to a large extent on freeing rates from regulatory control.
After years of debate, the government has finally decided to scrap TAMP when it goes for an overhaul of the institutional structure of these 11 ports by converting them to authorities from the trustee set-up under which they are currently run.
But shippers (cargo owners) and their trade bodies, a key stake holder in the export-import business, have raised a red flag.
“I’m not in favour of regulation; but I’m in favour of a tariff oversight. I don’t want somebody to fix the tariff, but if I find that the tariff levied by the terminals are unreasonable, I should have somebody who should be able to check it," says R. Venkatesh, president of the Western India Shippers Association, a body representing exporters and importers in India’s western region.
“For instance, at Jawaharlal Nehru Port, India’s biggest container gateway, if all the container terminals join hands and then kind of collude, they don’t openly collude, but they collude in a fashion where they are going to control the tariff, then shippers should have some authority to go to," Venkatesh says.
“Who do I have when you remove everything?"
There should be some dispute resolution forum to address such grievances.
The government, shippers say, cannot relinquish its duties towards oversight.
Cartels continue to exist in the maritime industry in spite of fairly stringent anti-trust laws in the US and Europe.
In an industry (ports) which has a big impact on a country’s economy or on its economic competitiveness, the government has to be especially watchful, according to shippers.
“So, you must have a watchdog body of some form. If you don’t want to call it TAMP, don’t call it TAMP. But it should be a body which should have some sort of oversight over what is happening; somewhere you can go and at least file the necessary documents. We cannot expect everyone to follow the rules. You need to have a policeman standing at the signals just to ensure that nobody jumps the signal; and when he jumps, he is punished," Venkatesh says.
To be sure, the shipping ministry has addressed this concern partially in the Major Ports Authorities Bill to be introduced in Parliament.
The bill has provisions for setting up an independent review board, which will be tasked with, among other things, to look after the functions envisaged to be carried out by TAMP arising from the tariff-setting guidelines of 2005, 2008 and 2013, and the tariff orders issued by TAMP.
The review board would also look into the complaints received from port users against services and terms of service rendered by major ports (a term used to refer to ports owned by the Indian government) or the private operators operating in the major ports and to pass necessary orders after hearing the parties concerned.
Any party not satisfied with the order of the review board shall be free to resort to arbitration or other available legal remedy, according to the Major Port Authorities Bill.
Shippers, however, are not convinced. Because this provision refers only to services and service terms of ports and private terminal operators without specifically mentioning rates.
Erstwhile governments have been reluctant to free rates at the 11 ports, which, along with Kamarajar port (the only Indian government port that is run as a company) at Ennore near Chennai, account for some 57% of the country’s external trade shipped by the sea route because of its impact on the logistics costs over such a large portion of India’s export-import trade.
Even the Narendra Modi government itself took more than two years to decide on removing TAMP as part of the institutional reform of the major ports.
Assuming that the bill has a smooth passage in Parliament, it may still take at least 18 to 24 months for converting the port trusts into authorities. The real action will start only then.
P. Manoj looks at trends in the shipping industry.